The Nigerian naira on Thursday, experienced a modest recovery as the supply of dollars in the official market surged significantly.
This uptick comes after a tumultuous period for the naira, which had recently faced substantial depreciation.
Data from the FMDQ, reflecting daily trades on the Nigerian Autonomous Foreign Exchange Market, revealed that the naira appreciated by 0.60%.
It closed at N1,659.26 per US dollar, recovering from the previous day’s close of N1,669.15 on October 2, 2024.
This slight rebound followed a dramatic fall, with the naira witnessing an 8.25% drop from N1,541, the rate recorded on the last trading day of September.
Since July, when the naira fell below the N1,600 mark, it has encountered persistent market volatility, oscillating between N1,500 and N1,600 as it seeks stability, especially during times of dollar weakness.
This ongoing struggle underscores the challenges faced by the currency in a fluctuating economic landscape.
The foreign exchange turnover on Thursday skyrocketed by 147.66%, jumping from $181.86 million to an impressive $450.39 million.
This marked the largest single-day turnover since May 24, 2024, when $556.25 million was recorded, illustrating a significant increase in market activity.
The enhanced liquidity has provided a temporary respite for the naira, which has battled to regain its footing in recent months.
In September, the naira’s price movements stagnated as it attempted to stabilize amidst turbulent market conditions.
Despite Thursday’s rise in dollar supply presenting a glimmer of hope, the currency remains under considerable pressure.
At a press briefing last week following the monetary policy committee’s 297th meeting in Abuja, Central Bank of Nigeria Governor Yemi Cardoso addressed the ongoing challenges.
He stated, “Although the apex bank’s strategy is to unlock as many diversified sources as possible into the foreign exchange section, it is not enough and cannot replace the fundamentals.” Cardoso emphasized that achieving a strong exchange rate would be continuously hampered as long as Nigeria operates on a monolithic economy.
He also highlighted the potential impact of the Dangote Refinery, describing it as a game changer capable of revitalizing Nigeria’s dollar-starved economy.
“Lifting petrol from the $20bn refinery would ease FX pressure, and the effect would spiral into an economy battling dollar shortages,” Cardoso remarked, underscoring the refinery’s crucial role in addressing the nation’s foreign exchange challenges.
